Old-fashioned but effective, why are experts optimistic about sanctions on Russian banks?

The United States, Britain and the European Union have imposed a series of sanctions on Moscow after U.S. President Joe Biden set the tone for Russia’s incursion into Ukraine, and targeted several Russian banks to hamper their ability to raise funds in financial markets. Experts believe that bank sanctions, although old-fashioned and common, are the most powerful measure the United States can implement in the short term.

Internationally used sanctions
The Ukrainian crisis is heating up. After Russia announced that it recognized the two separated areas of eastern Ukraine as independent states and signed an agreement to give the Russian army the right to establish military bases, US President Biden has set the tone for Russia to start invading Ukraine and coordinating partners such as the United Kingdom and the European Union. , announced sanctions against Russia. Among them, Washington completely blocked Russia’s state-owned Development Bank (VEB) and the military bank PSB (Promsvyazbank), London locked up five banks including Bank of Russia (Bank Rossiya), and Brussels also offered to restrict Russia’s access to EU capital and financial markets s method.

Indeed, sanctions appear to have become the West’s main weapon in response to Russia’s aggression against Ukraine. According to the legal professional body LexisNexis, since the United Nations Security Council established the first sanctions regime in Southern Rhodesia, today Zimbabwe, global sanctions actions have become increasingly complex. The purpose of sanctions is mainly to prevent the escalation of conflicts, resolve conflicts, curb nuclear proliferation, or combat terrorism and human rights violations.

Killer trump to block dollar transactions
In the face of a pushy Russia, experts believe that restricting the use of the dollar by Russian state-owned banks is the most powerful sanction; that is, bank sanctions are the most influential measure the U.S. can impose in the short term. Brian O’Toole, a former senior adviser to the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), said such sanctions would prohibit Russian banks from conducting any transactions in U.S. dollars, essentially freezing any dollar-denominated bank transactions at home and abroad. assets or liabilities.

The purpose of the bank sanctions is to block international payments between locked Russian banks and U.S. banks, in order to hit the Russian economy. Kay Georgi, an international trade lawyer, said that since most global trade transactions are conducted through the U.S. dollar, once the currency exchange is cut off, it may make it difficult for the target bank to conduct U.S. dollar transactions, which is an effective sanction.

Risk of financial instability
In fact, part of the purpose of the bank sanctions was to force Russia’s central bank to use its strong currency reserves to get out of trouble. Chris Weafer, head of Macro Advisory, believes that Russia has some defensive weapons against foreign attacks on financial stability in the face of sanctions: strong currency reserves, high oil prices, and 2021 With only 18% of its debt-to-GDP ratio in 2018, Russia is well-positioned to withstand tightening of existing sanctions.

But while Russia has large reserves of a strong currency, currently worth $635 billion, that could help counteract potential shocks, Elina Ribakova, an economist at the Institute of International Finance, said that even if Russia had enough Reserves, sanctions could still lead to a run, which would definitely have a severe impact on the domestic financial system, which would raise the risk of financial instability, including widening spreads and a sell-off in the ruble.

Whether it works or not depends on history
However, Igor Yurgens, vice-president of the Russian Union of Industrialists and Entrepreneurs, a powerful lobbying group, said the Russian central bank has been working on a current account program in China through which Converting cash would help mitigate the impact of sanctions, and while the situation is difficult, authorities have conducted technical stress tests and should be able to cope for a while. Sergey Aleksashenko, a former deputy governor of the Russian Central Bank, believes that the threat of Western sanctions is nothing more than an escalating virtual or information war between Russia and the West. In this confrontation, Putin’s weapon is the chariot, and the West is the sanctions.

So can bank sanctions really work? The Brookings Institution, a Washington-based think tank, draws some conclusions from the history of U.S. economic sanctions, which is that sanctions alone are unlikely to have the desired effect if the goals are large or short-lived. Even if sanctions are comprehensive and have almost universal international support, they may not achieve their goals. The Persian Gulf War is an example, until the U.S.-led coalition launched Operation Desert Storm in 1991. Sanctions alone did not bring Iraqi dictator Saddam Hussein out of invading Kuwait. .

Javelin and stinger missiles blocked the first day of the Russian offensive, and the air strikes in the capital Kiev continued for two days

After the Russian army launched a full-scale attack on Ukraine from the early morning of the 24th, the progress on the first day was not as fast as expected. Through the assistance of the European and American thorns, shoulder-fired anti-aircraft missiles, javelin, NLAW and other new anti-tank missiles, the Ukrainian army closely resisted the Russian offensive, except for the north. The advance was fast, and the eastern and southern fronts were still fighting fiercely in the border cities. The capital Kiev was attacked by intensive air strikes for 2 consecutive days.

On the 24th, the Russian army cooperated with Belarus to march towards Ukraine from the north, central and southern fronts. The northern route is the closest to the capital Kiev. It is considered to be the main route of the Russian army’s beheading operation, and it used airborne troops to attack the Khostome Airport in the northwest of Kiev ( Hostomel Airport).

Relying on years of experience in fighting separatist groups in the Donbass, the Ukrainian army has surpassed the Russian army’s expectations of resistance. With the Stinger missiles recently assisted by the United States and European countries, it shot down at least seven Russian helicopters of various types.

An infrared-guided stinger missile with a range of up to 4.8 kilometers and a speed of Mach 2.2, developed and produced by Raytheon, which has shot down more than 270 aircraft and helicopters since it entered service in 1981.

In addition, the main force of the Russian army, which departed from Belgorod on the eastern front and Crimea on the southern front, entered the eastern border of Ukraine at Kharkiv and the southern port of Odessa. Resistance, and both places are currently entering the stage of street fighting.

The Ukrainian army used the American-made Javelin (Javelin) and the NLAW anti-tank missile developed in cooperation with the United Kingdom and Sweden to destroy more than 30 Russian tanks and 130 armored vehicles, and released many pictures of Russian soldiers being captured.

Javelin and NLAW are advanced anti-tank missiles currently in service in Europe and the United States. They have a range of 1 to 4 kilometers. They are equipped with advanced targeting systems and have the ability to ignore after shooting. Top attack mode, aiming at the most vulnerable roof of armored vehicles to ensure kills, is especially beneficial for defenders in urban battles.

The information war started simultaneously, and the Ukrainian military received a large number of heart war messages and was attacked by DDoS

The second is to confuse cognitive types, such as pretending that Ukrainian officers and soldiers say “The commander of Kramatrosk has run away, the situation is very bad, and many of us have to dodge.” or “Derba Debaltseve’s troops and volunteers have been killed, we should flee!” Such messages try to confuse the morale of Ukrainian troops on the front lines.

There was also a text message pretending to be the central government of Kiev, which read, “Your account balance has been adjusted to 10 hryvnia (approximately TWD 9.50), and the country thanks you for your contribution to the anti-terrorist mission in the east.”

Because Russia has more advanced electronic warfare equipment, it can quickly locate and send text messages from the mobile phones of Ukrainian soldiers, and use the methods commonly used by fraud groups.

For example, first send “Leave, or you will die!” to the mobile phone of the Ukrainian army officer and soldier, and then send a message to the soldier’s family, telling them that “your son (husband) is dead,” and then call the soldier’s mobile phone when the line is busy, or immediately shelling The location of the mobile phone signal makes it impossible for the family to contact their relatives on the front line at the moment, causing panic in the rear.

Since yesterday, the Russian cyber army has carried out DDoS attacks on the Ukrainian government and military networks. With the influx of large-scale traffic in an instant, the network has been paralyzed. In the past few days, the Ukrainian Ministry of Foreign Affairs, the Ministry of Defense and many enterprises, banks website, often unavailable.

The UK’s National Cyber ​​Security Centre (NCSC) has warned that the Sandworm threat actor, a hacker group controlled by Russia’s military intelligence agency GRU (GRU), is focusing its cyberattacks on Ukraine.

Sandworm has used VPNFilter malware many times before, targeting unsuspecting routers or cloud hard drives on the corporate network. After hacking, the files are locked. Many European and American companies have been hit before, and were only recovered after being extorted by Sandworm for ransom. material.

NATO, to assist Ukraine in resisting the Russian cyber offensive, has dispatched a cyber army to Kiev consisting of experts from Poland, the Netherlands, Lithuania, Estonia, Croatia and Romania.

Although Ukraine itself is not as strong as Russia in electronic and information warfare, it has learned to use some techniques to confuse the enemy on the front line over the years.

For example, many Ukrainian front-line bunkers will hang the American flag, or deliberately use English for radio communication, pretending to be a member of the U.S. Navy SEAL or a member of the Green Flat Cap Special Forces, commanding operations on the front line, etc., to confuse the Ukrainian separatist forces or the Russian army. members, so that the other party does not dare to attack rashly.

At present, the Russian-Ukrainian war has officially started. It is expected that the Russian army will greatly increase the intensity of information warfare. The combat effect has yet to be confirmed by follow-up observation.

The Russian army captured the Chernobyl nuclear power plant, experts worry about the leakage of radioactive pollution

One day after the Russian army launched its attack on Ukraine, Ukrainian officials confirmed that the Chernobyl nuclear power plant, located north of Kiev, has been occupied by the Russian army. Although there are no reports of damage to the power plant equipment, it has aroused the concern of nuclear energy experts from various countries. Re-emergence of fighting on the ground may damage part of the nuclear waste cooling pool, leading to the leakage of radioactive contamination.

The Chernobyl Nuclear Power Plant started operation in 1977. In 1986, an explosion and leakage incident that shocked the world occurred. The damaged Unit 4 was sealed with a large amount of cement grouting after the incident. However, due to the power vacancy, the remaining The 3 units were still in operation until 2000 before they were all shut down.

In 2017, the Ukrainian government spent 170 million US dollars on the grouting Unit 4, and built another layer of stainless steel building to strengthen the storage strength, ensuring that the 200 metric tons of radioactive materials sealed in Unit 4 at the time of the incident would no longer flow out.

According to statistics, the leakage of pollution caused by the explosion accident in 1986 directly caused 56 deaths, and subsequently affected tens of thousands of people, including cancer and other radiation-related symptoms.

Including the International Energy Association and Ukrainian nuclear energy experts said that before the power plant was completely closed in 2000, there were still many waste fuel rods temporarily stored in the cooling pool near the power plant. The fuel rods in these cooling pools were taken out several years later, and the radioactivity was far higher than that in Unit 4.

Although nuclear energy experts from various countries generally believe that the Russian army has no special motivation to damage the equipment of the Chernobyl power plant, although the power plant was occupied, it was not damaged, indicating that the situation is still under control.

However, if the Ukrainian army counterattacks and fights again near the power plant, any explosion may damage the nuclear waste in the cooling pool, causing the leakage of radioactive pollution, and the spread area will affect the entire European continent, so it should not be taken lightly.

Therefore, many nuclear energy experts have condemned the Russian military’s attack on the nuclear power plant.

Coinbase’s Q4 results are good, but it warns that Q1 trading volume is reduced, and after-hours decline

Coinbase, a well-known cryptocurrency exchange, released its latest financial report after the US stock market on the 24th. Both revenue and profit were better than market expectations, but it warned that trading volume in the first quarter would decline. Shares of Coinbase fell more than 5 percent in after-hours trading that day.

According to the financial report released by Coinbase, revenue in the fourth quarter of 2021 jumped to $2.5 billion, compared with $585.1 million in the same period of 2020, which was higher than the $1.94 billion expected in a Refinitiv survey; net profit soared to $840.2 million from $176.8 million in the same period of 2020 $3.32 per diluted share, also beating the Wall Street consensus estimate of $1.85.

Coinbase’s revenue and profit performance are highly dependent on the popularity of the cryptocurrency market. As of the fourth quarter of 2021, Coinbase Verified Users (Verified Users) increased to 89 million, and Monthly Transacting Users (MTU) reached 11.4 million, a significant increase from 7.4 million in the third quarter.

Coinbase’s revenue mainly comes from transaction fees, unlike stock brokers who can earn interest income through user account balances, so MTU is an important indicator to observe Coinbase’s operations.

According to Coinbase’s earnings report, bitcoin accounted for 16% of total trading volume in the fourth quarter, ethereum accounted for 16%, and the remaining 68% came from other crypto assets, up from 59% in the third quarter.

Looking ahead to the first quarter of 2022, Coinbase forecasts that MTU and trading volume will be lower than in the fourth quarter of 2021, citing weakness in the cryptocurrency market, which has plunged 20% so far in the first quarter, mainly due to geopolitical tensions, coupled with the U.S. The Federal Reserve (Fed) released a hawkish signal, causing the prices of cryptocurrencies such as Bitcoin to dip.

According to Yahoo Finance’s quotation, Coinbase’s stock price rose 3.95% in normal trading on the 24th to close at $179.56, and fell 5.83% to $169.10 after the market.

Economic sanctions push Russia out of SWIFT? Academics point to key reasons

After Russia’s full-scale attack on Ukraine, Western countries have successively imposed economic sanctions, but they are relatively conservative about whether to expel Russia from SWIFT. Scholars from the Taiwan Academy of Economics pointed out the key reasons, pointing out that in order to avoid chaos in the political and economic order, the possibility of expelling Russia from SWIFT is extremely low.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system was originally intended to replace telex, and today more than 11,000 financial institutions use SWIFT to send secure messages and payment instructions. With no other world-recognized alternative, SWIFT remains the most important conduit for global financial transactions.

Russia’s expulsion from SWIFT would mean that it would be almost impossible for financial institutions to send money in or out of the country, which would be a sudden blow for Russian companies and their foreign customers, especially those who buy oil and gas from Russia and sell them in U.S. dollars. priced buyers.

The Taiwan Academy of Economics held a press conference today, during which they also expressed their views on this issue. Wu Mengdao, director of the Taiwan Academy of Economics, pointed out that US President Joe Biden announced new sanctions against Russia today, but mentioned that the current series of sanctions against Russia did not include a ban on Russia’s use of SWIFT.

“If Russia is really eliminated, the financial market will be in chaos.” Wu Mengdao said that when it is impossible to operate under SWIFT, even if an order can be placed, there is no way to actually execute the transaction; although Russia is trying to de-dollarize, 80% of the main external commodity transactions are Still US dollar transactions.

Wu Mengdao explained that the expulsion of Russia from SWIFT will have a considerable impact on the Russian economy, but this is also the reason why Germany does not want to do this, because Germany and Russia have relatively large trade exchanges in energy, considering the international economic and trade order, wars Shouldn’t escalate to this level.

“U.S. inflation figures are usually inverse to the support of the U.S. president.” Sun Mingde, director of the Economic Prediction Center of the Taiwan Academy of Economic Sciences, pointed out another reason. U.S. oil prices account for a very high proportion of consumer price inflation (CPI). That is to say, oil prices soared. A rise would be detrimental to the US President’s approval ratings.

Based on the above factors, Sun Mingde believes that electricity prices and natural gas have risen sharply in Europe last year. If the economic order is in chaos due to sanctions and energy prices soar, European economic growth will be hit, and the United States is not happy with such a situation. Therefore, most of the international consensus is It is to use “precision strikes” and try not to hurt yourself.

Long queues at ATMs in Russia and Ukraine | Threaten to explode the Great Depression

Russia has attacked Ukraine in an all-round way. The news shows that Ukrainian people who are eager to withdraw funds have long queued at bank ATMs, and even Russian people have rushed to the ATM because they are worried that they will not be able to withdraw cash. According to foreign media analysis, the impact of bank runs on the economy can be borrowed from the Great Depression of the US economy in the 1930s.

The Wall Street Journal reported on the 24th that the day after Russian President Vladimir Putin ordered a “special military operation” against Ukraine on the 24th, there were long queues in front of ATMs in Moscow banks, and people were worried that the government may restrict people from withdrawing cash. News of the cash being withdrawn from banks flooded social media.

Reuters reported that Ukrainian residents who chose to stay in Kiev also formed long queues outside banks and shops, hoping to withdraw cash and stock up on supplies. Others hurriedly packed their bags and looked around for transportation out of the city.

Business Insider reported on the 24th that local Ukrainian banks have decided to set a cash withdrawal limit. The Donetsk People’s Republic (DPR), located in the Udon region, this week restricted people to withdrawing 10,000 rubles (about $129) a day from ATMs. The National Bank of Ukraine also set the daily withdrawal limit at 100,000 Ukrainian hryvnia (about 3,339 U.S. dollars) on the 24th.

In order to avoid a domestic disaster, the Russian central bank announced emergency response measures on the 23rd, and the Russian stock market plummeted 38% on the same day due to the war between Russia and Ukraine. The Russian central bank’s plan includes closing the stock exchange and buying hundreds of millions of rubles, but it has not yet set a limit on people’s withdrawal of cash.

The fear of a run caused by these phenomena could eventually become a “self-fulfilling prophecy”, leading to bank failures, the report said. During the Great Depression in the United States from 1929 to 1939, there was a bank run incident, which eventually led to a large wave of unemployment and no way for people to get loans.

David Wheelock, senior vice president and special policy adviser to the president at the Federal Reserve Bank of St. Louis, pointed out in 2013 that locations with high rates of bank failures in the United States also saw larger declines in consumer spending.

After the Wall Street crash in October 1929, anxious Americans went around withdrawing cash, and many banks were forced to fail. With limited daily deposits in bank vaults, there was a sudden run on the bank, forcing the bank to sell assets in exchange for cash to customers who wanted to withdraw money, and then collapsed and went bankrupt.

The Federal Reserve Bank of St. Louis reported thousands of bank failures, leading to shrinking lending activity, business closures and rising unemployment. The crisis also sparked deflation, as bankers decided to build up cash reserves and people struggled to hoard cash. As deposits dwindled, so did the amount banks could lend, meaning people had less money to pay for goods and services, and the prices of those goods and services dwindled.

According to the St. Louis Fed report, deflation has further forced banks, businesses and debtors into bankruptcy, reducing consumption and ultimately driving up unemployment.

Electric vehicle start-up Rivian is actively expanding production, aiming to account for 10% of the market by 2030

Electric vehicle startup Rivian, which is backed by Amazon.com, has a much-anticipated prospect. Rivian CEO R.J. Scaringe said on the 24th that the Normal, Illinois, assembly plant is gradually expanding production, with the goal of grabbing 10% of the market by 2030.

Reuters reported that Scaringe attended the 2022 Wolfe Research Global Automotive Industry Conference on the 24th, saying that the Normo plant has made progress in increasing the production of electric vehicles, and hopes to achieve a 10% market share in the electric vehicle market in 2030.

On the 24th, Rivian’s shares soared 10.74% to close at $63.71.

Scaringe mentioned that the continuous shortage of global automotive chips is the most important factor limiting the scale of production expansion. Rivian’s actual production in 2021 is 1,015 units, 185 units less than the original target of 1,200 units, citing supply chain bottlenecks and battery production constraints.

Scaringe pointed out that Rivian is building its own battery production line, then trial production, and plans to jointly invest in production with suppliers. The current Rivian battery supplier is Samsung SDI. He also said that Rivian will work to ensure the safe supply of key battery raw materials such as lithium and nickel.

Amazon is Rivian’s big financier, holding 20% ​​of Rivian’s shares. Rivian has signed a contract with Amazon to produce 100,000 electric vans for Amazon by 2025.

In November 2021, Rivian was listed on the US stock market, and the IPO raised $13.7 billion, the largest IPO since 2014. On the fifth trading day of its listing, Rivian’s stock price hit a record closing high of $172.01, once becoming the world’s third most valuable automaker, after Tesla and Toyota.

Confidence in Ukrainian fiat currency collapses, people frantically buy cryptocurrency USDT soaring and decoupling

The Russian invasion, one way for the Ukrainian people to protect their assets is to convert the fiat currency in their hands into other assets. Therefore, the cryptocurrency has become one of the channels to quickly transfer assets. The local exchange even saw a strange rise in the dollar stablecoin of more than 5%. The price of Bitcoin also produces three different currency values.

When the country is threatened by turmoil, the common safe haven assets are gold and US dollars, but in the chaos, it is not easy to buy these two things. In contrast, cryptocurrency operations are easier.

According to data from Ukraine’s domestic cryptocurrency exchange, after Russia’s official invasion of Ukraine, the price of the U.S. dollar stablecoin Tether (USDT) fluctuated violently. The exchange rate of Tether to Ukrainian fiat currency (UAH) came to 1:32.3, which should have been Tether, which is pegged at 1:1 with the US dollar, also rose to US$1.1 at one point.

This is because USDT is not in unlimited supply, especially in smaller exchanges, the amount of USDT that can be exchanged is limited, so there is a strange phenomenon of currency price decoupling.

Compared with Tether, another U.S. dollar stable currency USDC has a worse circulation rate in Ukraine and a smaller supply, so it is also 1:1 anchored to the U.S. dollar, but the currency value of USDC in the Ukrainian exchange is one dollar lower than USDT. This creates a strange phenomenon. On the Ukrainian exchange Kuna, the price of a Bitcoin is 37715 USDT, or 39248 USDC, which is also equal to 40819 US dollars.

At this moment, on exchanges in Taiwan and the United States, the price of Bitcoin is 38,535 USDT.

This is an extremely bad phenomenon for exchanges. Millions of dollars are waiting to buy cryptocurrencies. The question is who wants to exchange their cryptocurrency for Ukrainian fiat?

The conflict between Russia and Ukraine heats up, and the global price of nickel products for power battery raw materials may rise

The recent escalation of the conflict between Russia and Ukraine, in addition to the surge in natural gas and crude oil, may also impact the supply of non-ferrous metals such as aluminum, nickel and copper. According to TrendForce, nickel is a key upstream raw material for electric vehicle power battery manufacturing, mainly manufacturing ternary cathode materials. In 2021, the global nickel mine production will be about 2.7 million metal tons. The main producing countries are Indonesia, the Philippines and Russia. The total output is about 9% (including low, medium and high grade), ranking third.

At present, the penetration rate of the new energy vehicle market is accelerating, and ternary power batteries account for nearly half of the market share, which means that the demand for nickel, the upstream raw material for automotive power batteries, will become stronger. The continued deterioration may affect the global nickel supply in the short term, push up nickel prices, and further increase the cost pressure on terminals such as the electric vehicle industry.

TrendForce said that in the medium to long term, most of the new nickel ore smelting and processing projects in recent years are located in Indonesia and other places. In 2021, Indonesia’s nickel ore production will account for about 37% of the world’s total production. Half a year will improve nickel supply and demand. TrendForce specifically mentioned that Indonesia’s export ban on mining last year only prohibited the export of raw ore, but did not prohibit Chinese companies such as Huayou Cobalt, Tsingshan Group, Ningbo Liqin, and GEM from investing in Indonesia to build nickel ore processing and smelting projects. The smelting of raw ores into concentrates, as well as further processed products, are not affected by the export ban.

From the perspective of the supply situation of manufacturers, the top five large nickel ore manufacturers in the world, the Russian industry Norilsk, supplies about 9% of the world’s nickel raw materials, and the production and processing of nickel ore is located in Russia, accounting for about 90% of Russia’s overall output, and the output of high-grade nickel is It accounts for 22% of the world’s total (according to nickel content, it can be divided into high-grade nickel, medium-grade nickel and low-grade nickel, high-grade nickel refers to Ni content ≥ 10%), ranking first in the world. This is followed by China’s Jinchuan with 17%, Switzerland’s Glencore with 13%, and Brazil’s Vale with 12%. TrendForce believes that, according to the conflict situation between Russia and Ukraine, if Europe and the United States impose sanctions on Russia, due to the high concentration of production and processing in Norilsk, it may cause a change in the flow of Russian nickel, that is, the Russian nickel that originally flowed into Europe and the United States may flow into China in large quantities, so the sanctions will lead to a change in the flow of nickel in Russia. Market share decline is less likely.

TrendForce said that at present, high-nickel-based ternary cathode materials (mainly referring to ternary materials with high nickel content such as NCM622, NCM811, and NCA) have the advantages of higher energy density and less precious metal cobalt raw materials. The market share of cathode materials has increased rapidly, from 10% in 2019 to nearly 40% in 2021. The development of high nickelization means that the consumption demand for nickel per ton of ternary cathode materials increases. With the accelerated penetration rate of new energy vehicles in China, Europe and the United States, the market demand for power lithium batteries is strong, and the overall nickel inventory continues to decline. Currently, global refining Only 100,000 tons of nickel stockpiles remain. Under the tight supply and demand, the spot market price of electrolytic nickel in China will reach 130,000 to 150,000 yuan per ton in 2021, and it will rise to 160,000 to 170,000 yuan per ton in early 2022. 10,000 RMB, the possibility of continuous rise cannot be ruled out.